Sales_Target_Setting

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Sales LeadershipCreating High Performance

Sales Target Setting

Over the past 47 years Mercuri International, the largest sales performance companyin the world, has been analysing sales team performance factors that result inconsistent target achievement. Over the past 10 years our study of sales team results

shows that the average team worldwide has a 58% under-performance curve. Inother words, 58% of a sales people in a team under-perform against theirindividual target each year:


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Sales Leadership

Sales Target Setting

The reasons behind inaccurate sales targets

The same average ratio, approximately 60:40 under-performance, has been found inindividual sales teams in almost every sales performance audit we have undertaken inrecent years. If we discount those sales people who only over and under-perform by+/-10%, the data is telling us that only 24% of salespeople hit their planned

targets. Most have their targets set too high year on year. Why is this?

The four major reasons that appear in most sales management processes thatexplain why only a quarter of the team achieve the sales plan are as follows:

Under and Over-Performance against Budget for >300 Sales people

worldwide Business-to Business Sales

-150

-100

-50

0

50

100

150

200

250

1 14 27 40 53 66 79 92 105 118 131 144 157 170 183 196 209 222 235 248 261 274 287 300

Percentage

achieved

againstbudget


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Sales Leadership

In 2002 exactly 71% of the team under-performed, in 2003 there was a 57% under-performance and in 2004 64% of the team under-performed. Overall sales targetswere missed by 27% in 2002, 25% in 2003 and 16% in 2004.

Despite these figures (and the fact that 25% of the team left the organisation in 2003),the target increases in percentage terms over the actual achieved in the previous

sales year were on average 9% in 2003 and a massive 44% in 2004. Some

individuals had to increase their sales result performance by up to 40% in 2003 andby an incredible >1000% in 2004. It was interesting to sit down with the salesmanager and ask how these salespeople planned to achieve these types ofperformance hikes! We call this Management by Hope.

New Salespeople Targets

In a recent study of four different business-to-business sales teams in the UK wefound target setting for new salespeople, compared to the average actual salesachieved in the previous year by experienced salespeople, to be higher in most cases

(possibly because new salespeople recruited within the same industry were expectedto achieve their results through selling to their old customers).

If target setting and accurate budgeting is becoming increasingly more important foryou and your business, the Mercuri International studies into this area of salesmanagement will be relevant. This Mercuri Fact Sheet can only serve as a brief andgeneral introduction. For more information on this subject or to receive relatedMercuri Fact Sheets, then please contact Moyra Smith on 01932 844855 or by e-mail

to [email protected] .

UK Percentages of New Salespeople with targets higher than, equal

to, or lower than the average 'actual' achieved by the team in the

previous year

52

28

20

Higher

Equal

Lower

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Sales_Target_Setting